All Forum Posts by: Luis Castillo

Thanks for clarifying that Steve, obviously that' why you're the tax guy. But if I am right about finding a property at 80% of it's present value and you are right about breaking even, then it's not costing this person anything to cash out, right?

But I do understand that if you take it in pieces, it is cheaper for you.

I mentioned the master lease because it sounded like you didn't want anything to do with owning the BH property. Most people look it master leases as benefits to the buyer, but you can negotiate it to benefit you. If you have a guaranteed income from the lessor you can borrow on the property up front, plus you can ask for a large deposit from the lessor. Since you are offering good terms to the lessor you might achieve a higher price when you sell it to him. A property that needs work in a rent control area, in a soft market isn't going to bring top dollar now.

You have to make sure he has the funds to fix the property and even make that part of your agreement.

I have to agree with Aaron, It seems that if you get all the money upfront, in a short time it's going to be gone. At least with the master lease you can get what you need now and still have plenty for later.

Having said all that, I do think that in your best interest you shouldn't be in a hurry to do anything. You seem to have to much on your plate that isn't settled and time can't hurt you. As far as the dogs and leasing is concerned, that's what pet deposits are for. If you look I am sure you can find the perfect house to rent/lease or lease with option to buy. We are in the perfect market for that.

Good Luck. Remember you aren't under time constraints to sell or buy. Use time to your benefit.

Something no one has mentioned, if purchased correctly you would try to purchase these rental properties at 70% of market value. These properties do exist, but for arguments sake lets say 80% of market value. Here are some numbers. Lets take a rental property that has a value of $700,000 and you can buy it at 80% of its value.
That would be $560,000. To purchase this property you would need 30% down payment, that would be $168,000. If you take 168,000 out of your IRA and you have to pay 35% that would be $58,000.

So to recap, you purchased the property $140,000 below mkt value and you paid $58,800 in penalties for the privilige. You are still up $81,200 in equity plus all the income and appreciation you will ever make on the deal.

Pull the money out!!! But only when you have found the ideal property. Remember these properties are out there.

Consider doing a master lease on the Beverly Hills property. A 3.5 cap rate won't get alot of people interested but a master lease to an experienced investor may work for both of you.

I also would look for a lease with option on the house you're looking for. You can keep most of your cash and you're payment will probably be lower than if you purchased.

That leaves your 100k and your 401k to invest as you decide.

Brandon your request is the same basically as saying I want to buy a car. We know you can qualify and you may have narrowed it down to, I like Fords. but we don't know if you want a truck, sports car, luxury or just to run around town.

It would be helpful to know what you want to accomplish and how much time you want to put into it and what you expect out of it.

Even curious as to why commercial.

Hello everyone, I have been investing for 30 years now. I had stopped for a while but am catching my 2nd wind now. I have some pretty hefty goals so I going to need some help out there. I want to buy approx. 2500 units (multi-family) in the next 3-5 years. I have purchased in Texas and southern Ca. from single family up to 150 units. Presently looking for 75 and up. If you have anything, I would like to hear from you.

I love reading the forums, it's a great site. Congratulations to Josh for hitting 100,000 members. Great job!!!

It's called cash on cash return because it's exactly that. CASH that's left over divided by the investment. It's only one thing to look at when you're buying an investment property.

As far as starting offer I would get 70% of the ARV which is $245,000 and subtract the work needed $100,000. So I would start my offer at $145,000. Make sure that the ARV is correct and that your $100,000 will cover all your repairs plus a buffer of about 10%.

As far as presenting it to the bank, you have to emphasize cash, close quickly and the dangers involved with the bank doing all the work themselves. We know as investors the problems with contractors and subcontractors. The reality of your fixer getting vandfalized and money is time. So the banks may want to get this one off their books.

Reggie, I agree with J Scott's numbers, they work if you can get $800 in rent; however, according to the comps other properties are selling cheaper in the area. It sounds like in this area you might be able to pick properties up for 20K. Try to do a little more homework on the comps you gave that sold for 16k and 20k. See if you can find out how much work they needed when they were originally sold.

Don't stop. Add anything you can to your list in order to create business. Time will take care of the rest. Before you know it you won't have the time to find the deals because you'll be working on putting them together and closing them.

I'll give away my age now, "keep on truckin"